UPDATE 1-Myanmar's new stock exchange prepares for first listing

* Second firm to list likely to be Thilawa Special Econ Zone (Adds confirmation that FMI will be first to list)

By Aung Hla Tun

YANGON, March 13 (Reuters) - Myanmar’s new stock exchange plans its first listing on March 25, the deputy finance minister told Reuters, more than three months after it launched.

The Southeast Asian country’s economy was devastated by nearly 50 years of military rule and rapid reforms since the junta handed over power in 2011 have included the development of capital markets to help finance growth, such as the new stock market.

But with challenges ranging from governance standards to inexperience and lack of capacity, progress has been slow.

Since the exchange’s official opening in December, there have been no transactions because there is nothing to trade.

The first company to list on the Yangon Stock Exchange (YSE) on March 25 would be First Myanmar Investment (FMI), Deputy Finance Minister Maung Maung Thein told Reuters on Monday.

FMI is a conglomerate of tycoon Surge Pun and one of Myanmar’s biggest public companies. FMI has a head start on other companies in meeting exchange requirements for listing as sister company Yoma Strategic Holdings Ltd is already listed in Singapore.

The second company to list would likely be Thilawa SEZ Holdings, the deputy finance minister said. He was unable to say when Thilawa, which controls a new industrial zone jointly run by the government and a Japanese consortium, would be ready to join the exchange.

A third company would also list in the first wave, but the deputy finance minister was unable to give further details.

The exchange had tentatively planned to launch trading on March 11 but delayed after problems found in testing, a Yangon-based banker said. That was the latest in a string of delays.

The FMI listing would not involve an initial public offering or the raising of fresh capital, the banker said. The listing would recycle an existing equity issue as FMI would list shares on the YSE that it had already sold to the public through direct subscription, he said.

Aside from FMI and Thilawa, the government wants four other companies to list. Among them are Myanmar Citizens Bank and First Private Bank.

Myanma Economic Bank owns 51 percent of the exchange, presenting another potential problem if foreign investors should be allowed to invest in the future. The bank is among several lenders on the U.S. Department of Treasury’s list of sanctioned entities due to its ties to the former junta.

Japan’s Daiwa Securities Group Inc and Japan Exchange Group Inc, which operates the Tokyo Stock Exchange, own the rest of the YSE.